Arista Networks down despite earnings beat

Published: 2026-05-06 00:39:40 ET ANET

Arista Networks shares tumbled approximately 10% in after-hours trading on Wall Street yesterday, following a cautious guidance outlook, despite quarterly results that exceeded expectations. The specialist in networking equipment for data centers, cloud and artificial intelligence reported Q1 2026 revenue of $2.71bn, up 35.1% y-o-y and up 8.9% sequentially. The consensus anticipated about $2.62bn.

Kevin Smith

Published on 05/06/2026 at 12:39 am EDT

In terms of profitability, adjusted EPS reached $0.87, above the $0.808 expected by analysts, while GAAP operating income rose to $1.16bn and net income reached $1.02bn. Its adjusted operating margin remained high at 47.8%, stable y-o-y, demonstrating the group's continued operational discipline, despite accelerating revenue.This negative market reaction is primarily due to the projected trajectory for Q2. Arista is targeting revenue of approximately $2.8bn, along with an adjusted operating margin of 46% to 47%, lower than that in Q1. This forecast also implies more moderate annual growth than in Q1, contrasting with the high expectations baked into the stock's valuation.CFO Chantelle Breithaupt said that this performance reflects disciplined execution within a still dynamic macroeconomic and supply chain environment. Investors will now be monitoring Arista's ability to convert AI-related demand into sustainable growth without further pressure on margins.